China - Asean Free Trade Area Of ​​the Trade And Direct Investment Effect Study

Economic globalization and regional economic integration are the two trends of economic development of the contemporary world. The regional economic cooperation in East Asia becomes the focus point of the world in 21st century. The Frame Work Agreement of China-ASEAN Overall Economic Cooperation signed by China and ASEAN in November 2002 signified the beginning of China-ASEAN Free Trade Area (hereafter called CAFTA).It is very important to analyze the trade effect and foreign direct investment (hereafter called FDI) effect of CAFTA while CAFTA is still under construction. This kind of pre-study can make both China and ASEAN know what they will get from CAFTA and how to construct CAFTA well.Both China and ASEAN are developing countries. Studying the trade effect and FDI effect of CAFTA is actually studying how to construct FTA between developing countries. If CAFTA is constructed successfully in the future it will set a good example for developing countries to evade the negative effect of economic globalization and cooperate with each other.This thesis includes four chapters. In the first chapter, the background and significance of CAFTA are introduced. In the second chapter, the thesis analyzes the trade effect of CAFTA from the aspect of tariff reduction, comparative advantage and intra-industry trade after giving an introduction of the trade effect theory of regional economic integration. After analyzing the FDI effect theory of regional economic integration, the third chapter puts emphasis on the current situation of FDI and FDI effect of CAFTA. On the basis of analysis above, this paper gives some advices about how to respond to the trade effect and FDI effect of FDI in the last part.